China Blocked From Purchasing A U.S.-based Semiconductor Company

The White House on Wednesday announced that Pres. Donald Trump has blocked a Chinese venture capital fund from purchasing of Lattice Semiconductor Corporation, a U.S.-based semiconductor company because of national security concerns.

China Venture Capital Fund Corporation Limited, known as CVCF manages industrial investments & venture capital which had agreed to purchase the semiconductor company for $1.3 billion but the president’s order prohibits the acquisition.

According to White House officials, there were concerns about the potential transfer of intellectual property to CVCF, Beijing’s role in supporting the transaction and the importance of the semiconductor supply chain and Lattice products in particular by the U.S. government.

Semiconductors play a critical role in national security. A concrete example comes from a new semiconductor developed by the Defense Advanced Research Projects Agency (DARPA) that gives United States military a measurable advantage in one critical arena of the modern battlefield: electronic warfare.

A recent Washington Post article describes, other “near peer” adversaries have strong electronic warfare capabilities, so to maintain global U.S. military leadership semiconductor technology will continue to play a critical role.

U.S federal law authorizes the president to prohibit acquisitions by foreign buyers if he concludes there is credible evidence that the buyer’s exercise of control might impair U.S. national security.

The acquisition is being handled by Palo Alto-based Canyon Bridge Capital Partners which responded to news of the block by saying it was “obviously disappointed” in the decision “to forgo what we believe to be an excellent deal for Lattice’s shareholders and its employees by expanding the opportunity to keep jobs in America.”

Lattice makes programmable logic chips, which have a wide variety of uses because their attributes can be changed using software. The chips are used in communications, computing, and in industrial and military applications. The company generates more than 70 percent of its revenue in Asia, according to data compiled by Bloomberg.